Smile Telecoms secures $365m for LTE in Africa

Smile Telecoms Holdings Ltd (Smile), which owns and operates mobile wireless 4G LTE broadband networks in the 800 megahertz (MHz) band in Nigeria, Tanzania and Uganda, has raised $365 million in debt and equity financing.

Smile Telecoms Holdings Ltd is the parent company of Smile Communications Nigeria Limited.

The funding will be used to expand Smile’s 4G LTE networks and services, such that, by the end of this year, the firm will offer voice services, in addition to mobile broadband; and will have national coverage comparable to that of the largest 3G network in each of its countries of operation. It will also launch its broadband network in DRC early next year.

The funding comprises $50 million of equity, raised from the Public Investment Corporation (PIC) for the government Employees Pension Fund (PIC), and a $315 million multi-tranche, multi-jurisdictional debt facility led by Africa Export-Import Bank with participation from the Development Bank of Southern Africa, Diamond Bank Plc, Ecobank Nigeria, the PIC, the Industrial Development Corporation of South Africa Limited and Standard Chartered Bank.

Under the terms, the proceeds will be used to accelerate national network roll-out, including equipment and services provided by Alcatel Lucent and Ericsson, a full Multiprotocol Label Switching (MPLS) network, a London Point of Presence (PoP) and expanded international backhaul services, and to fund operational expenditure and working capital.

Smile’s objective is to become the broadband provider of choice for super-fast data and clear voice in each of its markets and to provide the over 300 million potential customers in its four countries of operation with an efficient, reliable, quality tool to accelerate development and wealth creation. Technological advancement has facilitated the realisation of this objective by creating an ecosystem for the 800MHz band that can overcome the restrictions associated with limited fixed line infrastructure and over-contended legacy networks and lead to higher broadband penetration, which is a key driver to economic growth.

According to Broadband Strategies Handbook, of the World Bank, “A 10 per cent increase in the penetration rate of broadband in developing countries is associated with a 1.4 per cent increase in GDP (gross domestic product) per capita …” Furthermore, there is persuasive evidence linking broadband to job creation; the Brookings Institution states that “for every one percentage point increase in broadband penetration, employment is projected to increase by 0.2 to 0.3 per cent per year.”

The funding is one of the largest capital raises ever for a telecommunications operator in Africa and brings the total funding committed to Smile since its founding in 2007 to approximately $600 million.

Its Chief Executive Officer, Irene Charnley, said: “Now that we are fully funded to deliver national coverage of unrivalled super-fast internet access and clear voice services, our priority is to ensure that our customers experience and benefit from the power of high speed mobile broadband compared to the narrowband services available to date, including how to effectively manage the superior experience in terms of data consumption.”

Chairman, Smile Communications Nigeria Limited, Dr. Ernest Azudialu- Obiejesi, said the funding is an enabler of its quest to deepen broadband penetration in Africa especially in key markets of Nigeria, Tanzania, Uganda and Democratic Republic of Congo.